SECUNDERABAD CANTONMENT BOARD versus M/S B. RAMACHANDRAIAH & SONS

Citation: [2021] 3 S.C.R. 68 · Decided: 15-03-2021 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 3 S.C.R.
   [2021] 3 S.C.R. 68
68
SECUNDERABAD CANTONMENT BOARD
v.
M/S B. RAMACHANDRAIAH & SONS
(Civil Appeal  Nos. 900-902 of 2021)
MARCH 15, 2021
[R. F. NARIMAN AND B. R. GAVAI, JJ.]
Arbitration and Conciliation Act, 1996 – s.11 – Limitation
Act, 1963 – s. 9 and Art.137 – Appellant floated a notice inviting
tender for a term of annual contract – Three agreements were entered
into with the respondent – Agreements had arbitration clause – Work
orders were issued – Thereafter, final contract certificates were
issued by the appellant and final payment was received by the
respondent of the works in question – Respondent then started
making demands for reimbursement on account of variation in prices
of material, labour and fuel – By letter dated 07.11.2006, respondent
requested for appointment of arbitrator – Respondent issued another
letter dated 13.01.2007 and stated that it had no option but to rescind
contract and have an arbitrator appointed within 30 days – It is
not disputed that 30 day period was over by 12.02.2007, however,
respondent kept on writing letters in 2007-2009, reiterating its claim
– Finally, respondent issued a legal notice dated 30.01.2010 and
‘clarification notice’ dated 20.03.2010 – Appellant by letter dated
10.11.2010, rejected the claim of reimbursement and stated that
they have made final payments towards the work order – On
06.11.2013, the respondent filed applications u/s.11 of the Act –
The Single Judge of the High Court allowed the application and an
arbitrator was appointed – On appeal, held: It is clear that demand
for arbitration was made by letter dated 07.11.2006 – Thereafter,
another letter dated 13.01.2007 informed the appellant that
appointment would have to be made within 30 days – The time begin
to run on and from 12.02.2007 – Once the time started running,
any final rejection by the appellant (letter dated 10.11.2010) would
not give any fresh start to a limitation period which was already
running, following the mandate of s. 9 of the Limitation Act – This
being the case, the High Court was clearly in error in stating that
since applications were filed on 06.11.2013, they were within the
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limitation period of three years starting from 10.11.2010 – Even
otherwise, the claim of the respondent was also ex facie time barred
– Thus, judgment of the High Court is set aside.
Allowing the appeals, the Court
HELD: 1. Limitation is not a jurisdictional issue but is an
admissibility issue. So far as the applicability of Article 137 of the
Limitation Act to the applications under Section 11 of the
Arbitration Act is concerned, it is clear that the demand for
arbitration in the present case was made by the letter dated
07.11.2006. This demand was reiterated by a letter dated
13.01.2007, which letter itself informed the Appellant that
appointment of an arbitrator would have to be made within 30
days. At the very latest, therefore, on the facts of this case, time
began to run on and from 12.02.2007. The Appellant’s laconic
letter dated 23.01.2007, which stated that the matter was under
consideration, was within the 30-day period. On and from
12.02.2007, when no arbitrator was appointed, the cause of action
for appointment of an arbitrator accrued to the Respondent and
time began running from that day. Obviously, once time has started
running, any final rejection by the Appellant by its letter dated
10.11.2010 would not give any fresh start to a limitation period
which has already begun running, following the mandate of Section
9 of the Limitation Act. This being the case, the High Court was
clearly in error in stating that since the applications under Section
11 of the Arbitration Act were filed on 06.11.2013, they were within
the limitation period of three years starting from 10.11.2020. On
this count, the applications under Section 11 of the Arbitration
Act, themselves being hopelessly time barred, no arbitrator could
have been appointed by the High Court. [Paras 19, 20][83-A; 85-
G-H; 86-A-D]
2. Even otherwise, the claim made by the Respondent was
also ex facie time barred. It is undisputed that final payments
were received latest by the end of March 2003 by the Respondent.
That apart, even assuming that a demand could have been made
on account of price variation, such demand was made on
08.09.2003. Repeated letters were written thereafter by the
Respondent, culminating in a legal notice dated 30.01.2010. Vide
the reply dated 

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